The answers appear below each question.
- At 10 years, when I moved out, should I have taken the book value (purchase price minus depreciated amount) and depreciated this over the remaining depreciation period (27.5 years from the purchase date)?
- When you moved out, and the personal portion became rental property, you would use the original cost, capital improvements and then split that in half. Add a new asset for the newly rented portion of your duplex. Also add any assets that were actually put into this converted section if applicable. The depreciation would considered the first year for this converted section of the duplex and begin the 27.5 year recovery. Purchase date should remain the actual date and the first day it became available for rent is the day you converted it from personal to rental.
- Now that I have continued to depreciate the lower amount that was calculated in the beginning, can I calculate a new book value and now depreciate this value over the remaining depreciation period (27.5 years from the purchase date)?
- Yes, half the original cost as noted in the response to your first question.
Note: When a property is converted from personal use to rental use, the actual amount that is allowed for depreciation is the lower of cost or fair market value (FMV). In general the value would increase over time, for this reason I advised to use the actual and original cost, plus cost of improvements. It will be the easiest and most clear down the road to enter two rentals, your first duplex and then the one you converted. It will be much more simple for historical purposes and for a future sale.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
